Carlisle Companies - Value

Companies with their hands in lots of pots are benefiting from the upside in the global economy. Carlisle Companies (CSL), a diverse manufacturer, is using acquisitions to expand its reach into the emerging markets. This Zacks #1 Rank (strong buy) is expected to grow earnings by 24% in 2011.

Carlisle is a global manufacturer in numerous industries including construction materials, commercial roofing, heavy-duty brake and friction, foodservice, specialty tire and wheel, power transmission and aerospace.

On Dec 2, the company closed on its all-cash acquisition of Hawk Corporation, a supplier of friction products for brakes, clutches and transmissions for $413 million.

The company will join Carlisle's Industrial Brake & Friction segment. It will increase Carlisle's exposure to Brazil, China and India.

The deal was expected to be accretive in the first year.

Carlisle Beat By 10.3% in the Third Quarter

On Oct 15, Carlisle reported its third quarter results and surprised by 7 cents per share. Earnings per share were 75 cents compared to the consensus of 68 cents. The company made 76 cents a year ago.

Revenue rose 10% to $665.9 million from $604.2 million with organic sales jumping 7.9% from a year ago. Several acquisitions in the quarter contributed 2.3% to the third quarter sales total.

All of its segments saw organic revenue growth in the third quarter, even its largest segment, Construction Materials, which rose 4.3% to $358.4 million. Engineered Transportation Solutions saw a 17% gain to $186 million while Interconnect Technologies rose 43% to $61.4 million and Foodservice gained 1.6% to $63.7 million.

One area of caution going forward was the higher material costs the company was experiencing which could impact margins.

Zacks Consensus Estimates Rise

Since the third quarter report, the 2010 and 2011 Zacks Consensus Estimates have risen.

For 2010, analysts now expect earnings per share of $2.22 which is up from $2.19 just 60 days ago. This is earnings growth of 18% from the $1.88 per share the company made in 2009.

For 2011, analysts see earnings per share of $2.75 per share, up from the $2.69 they saw just 30 days ago.

Is Carlisle a Value Stock?

Carlisle is right on the edge of being just a bit too pricey to be a true value stock. It is trading with a forward P/E of 14.9 and 15 is usually my cut-off.

But some of its other metrics are in the value territory.

The company has a price-to-book ratio of 1.9, which is well within the range of a value stock which is usually a P/B under 3.0.

It also has a solid price-to-sales ratio of 1.0.

The company has a solid return on equity of 10.6% and rewards shareholders with a dividend currently yielding 1.7%.

Carlisle will report fourth quarter results on Feb 7.

Shares are trading at 2-year highs.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

 
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